PPP loans allow consumers to borrow money from banks that they can then spend on anything from mortgages to personal health care.
But as of Friday, the banks that issue PPPs are only required to allow borrowers with incomes of up to about $60,000 to borrow.
In fact, they can only allow borrowers making up to that much to borrow on their own, with no limits on how much they can borrow.
PPP is often used to fund the purchase of homes, car loans, student loans and even credit card debt.
The National Consumer Law Center said that borrowers who are allowed to borrow from banks under this new rule could end up paying more than $200,000 for the privilege.
While the CFPB says that the rules would be in place for 12 months, consumers who are currently being restricted from borrowing could be affected for up to two years, if they are allowed more than three times.
The rules have been criticized by the Consumer Financial Protection Bureau (CFPB), which is also the federal agency that enforces the Fair Debt Collection Practices Act (FDCPA).
The FDCPA requires the CFAB to investigate claims that consumers have been defrauded, or that their financial institutions have taken advantage of consumers by charging them fees or taking advantage of their poor credit history to make it harder for them to get a loan.
Consumer groups have called on the agency to rescind its ruling and let borrowers use PPP.
“It’s a little confusing to understand the CFCPA is not the same as the FDCPMP,” said Jennifer Sisk, senior policy analyst at the Center for Responsible Lending.
“CFPBs guidance is not binding on the CFO and is based on a set of technical interpretations.”
CFPBs is not ruling out that borrowers could be able to borrow $5 million or more through PPP, and some lenders are still allowing borrowers with higher incomes to borrow, according to the Consumer Federation of America.
But CFPs move comes at a time when lenders are ramping up efforts to increase lending, particularly to lower-income borrowers.
Last month, for instance, Wells Fargo said that it was opening up to 50,000 additional locations for low-income customers, and Citibank is planning to expand the number of locations in which borrowers with low incomes can apply for loans.
And last week, JPMorgan Chase announced that it would offer to offer up to one PPP for every $1,000 it earns.
But borrowers can still use PPs to borrow at the maximum allowed by the CFSPA, which is $250 per loan.
“PPP is an important tool for borrowers, but it should be used with caution and should not be used for the purpose of borrowing,” said Amy Warshawski, director of policy and advocacy for the consumer finance advocacy group National Consumer League.
The CFPBP is expected to issue a final rule next month, but the agency has not announced the details of how it will address borrowers who want to borrow in PPP form.
“While the CFB is committed to ensuring that the vast majority of our lending customers are protected, we do not have enough information to make a final determination on the extent to which this change would affect consumers,” CFPBS chief information officer Matt Wessels said in a statement.